Real Options in Partnership Deals: the Perspective of Cooperative Game Theory
نویسندگان
چکیده
In this paper we consider partnership deals under uncertainty but with downstream flexibility. We confine ourselves to bilateral deals and focus on the effect of options on the synergy set, the ‘core’, of a partnership deal. We distinguish between cooperative options, which are exercised jointly and in the interest of maximizing the total deal value, and non-cooperative options, which are exercised unilaterally in the interest of one partner’s payoff. We provide a simple framework that illustrates options effects in a two-stage model. The model can be readily extended to a binomial lattice. We investigate options effects in the presence of risk-aversion and in the presence of complete markets.
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